Nifty may test the level of 5,000 in this upmove

As expected, today there was a sharp reversal to the downtrend suffered by the market in the past two weeks. The Nifty gained 3%, the maximum since 28 October 2011, while the Sensex climbed 3.01%, its best performance since 29 August 2011. The gains on the Nifty may not be confined to one day, but may extend to the level of 5,000. The National Stock Exchange (NSE) saw a volume of 53.80 crore shares which is on the low. This means that while prices may head higher, it may not move in fits and starts.

After fluctuating between losses and gains the whole of last week, the market today opened higher tracking positive global sentiments. Reports over the weekend indicated that the International Monetary Fund (IMF) is considering a 600 billion euro package for Italy through a European Central Bank (ECB) funding. Reacting to the report, markets in Asia, including India, opened higher this morning.  The Nifty opened 59 points up at 4,769 and the Sensex resumed trade at 15,891, a gain of 196 points over its previous close.

The indices started on a northward journey supported by buying interest in capital goods, realty, metal and auto stocks. The market extended its gains in the post-noon session as institutional buying intensified, enabling the Nifty and the Sensex breach their psychological levels of 4,800 and 16,100, respectively. The benchmarks hit their intraday highs towards the end of trade with the Nifty touching 4,859 and the Sensex climbing to 16,186. The markets closed trade near those levels with the Nifty posting a gain of 141 points at 4,851 and the Sensex jumping 471 points to 16,167.

The advance-decline ratio on the NSE was a positive 1306:465.

While the broader indices also closed in the positive, they could not manage the Sensex’s performance today. The BSE Mid-cap index gained 1.50% and the BSE Small-cap index surged 1.72%.

The spirited market performance resulted in all sectoral indices closing in the green. BSE Metal (up 4.87%); BSE Oil & Gas (up 3.45%); BSE Bankex (up 3.43%); BSE PSU (up 3.06%) and BSE Realty (up 2.79%) were the top gainers.

The major gainers on the Sensex were Hindalco Industries (up 9.90%); Jaiprakash Associates (up 6.10%); Tata Motors (up 5.36%); Sun Pharma (up 5.28%) and HDFC (up 5.10%). Bajaj Auto (down 1.69%) and Hero MotoCorp (down 0.69%) were the only losers on the index.

The Nifty leaders were Hindalco Ind (up 9.87%); IDFC (up 6.76%); ACC (up 6.72%); JP Associates (up 6.43%) and Kotak Bank (up 6.3%). Bajaj Auto (down 1.36%) and Hero MotoCorp (down 0.06%) were also the lone losers on the Nifty.

The Asian pack closed higher on optimism after the IMF news on Italy. However, gains were pared after the IMF later said there were no such discussions. Meanwhile, an increase in retail sales in the US over the Thanksgiving weekend boosted the outlook for exporters in the region.

The Shanghai Composite added 0.12%; the Hang Seng surged 1.97%; the Jakarta Composite rose 0.27%; the Nikkei 225 gained 1.56%; Straits Times climbed 1.91%; the Seoul Composite jumped 2.19% and the Taiwan Weighted settled 1.68% higher. The KLSE Composite was closed for a public holiday.

Back home, foreign institutional investors were net sellers of equities totalling Rs805 crore on Friday. On the other hand, domestic institutional investors were net buyers of shares amounting to Rs1,036.55 crore.

Glenmark Pharmaceuticals’ US arm Glenmark Generics Inc has received tentative approval from the US health regulator to market its generic Montelukast Sodium tablets used for treating asthma and seasonal allergies. The approval is for Montelukast Sodium tablets in the strength of 10 mg, which is a generic version of Merck's Singulair tablets.  Glenmark Pharma declined 2.14% to close at Rs310.50 on the NSE.

Engineering, procurement and construction company Punj Lloyd Group has bagged a Rs469 crore order from state-run explorer ONGC for laying a submarine pipeline in the Mumbai High oil and gas field in the Western Offshore. The project, worth Rs469 crore, is scheduled for commissioning in May, 2013. Punj Lloyd surged 6.51% to settle at Rs49.90 on the NSE.

Lanco Infratech-owned Griffin Coal’s threat to halt coal supply to the Bluewaters Power Station in Western Australia unless prices are revised upward seems to have worked, with sources close to the development indicating an agreement might be inked within a fortnight. The sources said there could a price revision in favour of Lanco with respect to the supply contract with Australian firm Griffin Energy’s Bluewaters Power Station, besides some upfront fee. Lanco jumped 6.72% to Rs12.70 on the NSE today.